Copper prices have soared since Donald Trump’s return to the White House, driven by fears of potential tariffs on the metal. This surge has led to a significant shift in global inventories, with traders rushing to ship copper to the US before any tariffs are imposed. Until recently, copper futures in New York traded at premiums over the London Metal Exchange benchmark, allowing traders to profit from the arbitrage. This activity has depleted inventories outside the US, pushing LME prices to a record near $15,000 a metric ton last month.
As midterm elections approach, investors are questioning whether a strong Democratic performance could alter Trump’s trade agenda. Analysts at Natixis warn that the market may have developed a bubble that could burst if tariffs are ruled out. Macquarie Group predicts prices could plummet to $10,000 a ton in that scenario or rally to $18,000 if tariffs are announced with a delay, allowing more copper to be shipped to the US.
Traders have been caught off guard by Trump’s tariff decisions before. In July last year, he imposed a 50% levy on downstream copper products while leaving the commodity-grade form of the metal untouched, causing significant losses for those who anticipated broader tariffs.